IRS Ramping up Debt Collection Is an Opportunity for Tax Resolution Professionals

In 2016, the IRS started using private collection companies to collect overdue federal tax debts. This year the IRS will be ramping up that private debt collection program. During the 2018 fiscal year, the IRS assigned about 12,000 cases per month to four private collection companies. In 2019, that number will be about 40,000 cases per company per month, totaling about 1.9 million cases for the year.

The program targets accounts that owe money but are not actively being worked on by the IRS. When the IRS first started the private collection program, it lost money due to startup costs, but now it’s making a profit, and collection rates are up to about 1.7%.

Opportunity to offer tax resolution

The tax resolution market has always been a lucrative market to get involved in. Hourly fees for tax resolution work range from $175 to $500 per hour, and at the end of the 2017 fiscal year, there were about 14.1 million open, delinquent taxpayer accounts.

But now, with the IRS becoming more aggressive about assigning delinquent accounts to private debt collectors, more taxpayers will be in need of tax resolution services than ever before. Tax resolution is a service you can offer that will make your business more valuable than your competition. If you’ve been considering getting into tax resolution, now is a great time to do it. Keep in mind, before being able to represent clients for tax resolution services, you’ll need to be licensed as a CPA, tax attorney, or enrolled agent.

For more information about starting out in tax resolution, download our free ebook, How to Start Offering Tax Resolution.

Software that helps with tax resolution casework

In the past, tax resolution was difficult to get into. It required a lot of technical tax knowledge without many resources available to help you with the work. That’s all changed with the prevalence of software.

Canopy, for example, can save you hours per case with instant calculations, analytics, and form auto-population. Your client can fill out a survey with all their info, and Canopy will identify the best outcome for their case. Scenarios such as Offer in Compromise, Installment Agreement, and Currently Not Collectible are automatically checked for eligibility.

Additionally, you can pull your client’s transcripts in as little as two minutes, complete with hundreds of calculations so that you can see the full picture of your client’s tax history.

Canopy offers solutions for these tax resolution services:

• Collections
• Liens
• Penalty Abatement
• Levies
• Innocent Spouse
• Trust Fund Recovery

With the help of Canopy, you could be offering tax resolution services to taxpayers with tax debt in no time. Interested in seeing a demo of Canopy to learn more? Sign up for one here.